Monday, July 07, 2008

Johan Norberg Exposes Klein's "Shlock Doctrine"



From "The Klein Doctrine: The Rise of Disaster Polemics," by Johan Norberg, Senior Fellow at the Cato Institute

Executive Summary: Naomi Klein’s The Shock Doctrine purports to be an exposé of the ruthless nature of free-market capitalism and its chief recent exponent, Milton Friedman (click arrow above to watch video). Klein argues that capitalism goes hand in hand with dictatorship and brutality and that dictators and other unscrupulous political figures take advantage of “shocks”—catastrophes real or manufactured—to consolidate their power and implement unpopular market reforms. Klein cites Chile under General Augusto Pinochet, Britain under Margaret Thatcher, China during the Tiananmen Square crisis, and the ongoing war in Iraq as examples of this process.

Klein’s analysis is hopelessly flawed at virtually every level. Friedman’s own words reveal him to be an advocate of peace, democracy, and individual rights. He argued that gradual economic reforms were often preferable to swift ones and that the public should be fully informed about them, the better to prepare themselves in advance. Further, Friedman condemned the Pinochet regime and opposed the war in Iraq.

Klein’s historical examples also fall apart under scrutiny. For example, Klein alleges that the Tiananmen Square crackdown was intended to crush opposition to pro-market reforms, when in fact it caused liberalization to stall for years. She also argues that Thatcher used the Falklands War as cover for her unpopular economic policies, when actually those economic policies and their results enjoyed strong public support.

Klein’s broader empirical claims fare no better. Surveys of political and economic freedom reveal that the less politically free regimes tend to resist market liberalization, while those states with greater political freedom tend to pursue economic freedom as well.

Watch another
video segment here.


11 Comments:

At 7/08/2008 2:41 AM, Blogger Sophist said...

"Klein argues that capitalism goes hand in hand with dictatorship..."

Obviously it is the exact opposite. Capitalism goes hand in hand with democratic systems because it supports the rights of free trade and market economy.

History has shown that it is a form of socialism that goes hand in hand with dictatorship. This is an empirical fact.

However, it is true that capitalism has not dealt effectively with corruption, missuse of power and other related issues.

About Thatcher, Although I agree that her reforms were decisive for the longer term, she did not enjoy widespread popularity and that led to her resignation.

From Wikipedia:

"After her resignation a MORI poll found that 52% agreed with the proposition that "On balance she had been good for the country", while 48% disagreed, thinking she had not."

 
At 7/08/2008 8:09 AM, Anonymous Machiavelli999 said...

Capitalism definitely has a problem with corruption. Once companies become sucessful, they use their money to gain political connections and fix the markets to suit their needs. Then it is no longer free market capitalism but a quasi- sort of capitalism designed to protect the rich.

There are many, many examples. One recent one is Boeing losing a contract for refueling tankers in an open process and now using its political connections to make the DoD reverse its decision. Another one that I see in the near future is Bud asking the US Government to step in to block a hostile takeover attempt by InBev.

All these are examples of how companies say one thing and do another. They say they want a system free of government intervention, but whenever they are in trouble they appeal to the government for intervention. For example, commercial and investment banks wanting no regulation during the boom years and now begging for government printed cash.

So, now people associate capitalism with this preferential treatment for the rich and they obviously hate it. That is the main problem of capitalism today.

 
At 7/08/2008 8:32 AM, Anonymous ej said...

machiavelli,

The problem with corruption isnt inherent to capitalism (other then what would exest just due to human nature). The reason why companies spend so much money to control government piower is because the government has so much power. If a government sytayed limited and small and we had a truely free market system there would be no motive to spend a lot fo resources to influence the government. It is because government gets its hands one everything that causes an incentive for interest groups of all kinds to try to buy contol, because there is so much to lose if your apposing special interest has control. You want to lessen corruption, then keep the government out of things.

 
At 7/08/2008 8:39 AM, Anonymous Anonymous said...

"Capitalism definitely has a problem with corruption."

What an absolutely ridiculous canard....and we're to suppose that Socialism has eliminated corruption? Having worked in both the private and public sectors, I have found government officials to be much more morally bankrupt than corporate types. They're greedy about power, much more so than money.

 
At 7/08/2008 9:39 AM, Anonymous bob wright said...

Mark,

The link you reference "Watch another video segment here." doesn't work.

 
At 7/08/2008 9:57 AM, Blogger Mark J. Perry said...

Bob: Thanks, it's fixed now.

 
At 7/08/2008 10:13 AM, Anonymous Machiavelli999 said...

anon and ej,

Guys I am FOR free market capitalism and I agree the government should get its hands off of business. But just like union and "social justice" groups try to lobby the government to impose draconian restrictions on corporations, the corporations lobby the government to protect it from "unfair" foreign competition or to bail it out with government printed cash.

I agree that the answer is to keep government small, but we must recognize that the pressure for government to intervene comes not only from liberal groups but from corporations themselves.

The list of government subsidies and bailouts for businesses is just as long the list of labor and environmental restrictions. BOTH are dumb. And we must realize this.

 
At 7/08/2008 10:54 AM, Anonymous Anonymous said...

Machiavelli,

Isn't the real problem that of "bigness". Whether it is big government, big unions or big corporations, very large entities use their resources to gain influence and concentrate power.

You have cited the example of farm subsidies which perfectly illustrates this. The majority of subsidies go to very large agricultural operations not the family farm.

http://www.heritage.org/Research/Budget/bg1763.cfm

Sophist,

Perhaps, you could explain how the unpopular Margaret Thatcher was elected three times as prime minister in 1979, 1983, and 1987. You might also ask yourself why "New Labour" came to power in 1997 by embraced much of the rhetoric and policies of Margaret Thatcher.

Wikipedia has a very left leaning bias. More subtle perhaps than Naomi Klein but nevertheless, one that needs to be kept in mind.

 
At 7/08/2008 2:10 PM, Blogger bob said...

As Twain would say it's not that she's ignorant but rather what she knows is wrong
b

 
At 7/08/2008 2:30 PM, Anonymous Anonymous said...

Bob,

Touchez. The saying "Empty cans make the most noise" also seems appropriate.

There is more than just wrong headedness, or cherry picking history to fit one's purposes. Klein demonstrates the power of anger to undermine our ability to reason. Do any of us perform any better when we lose our temper or drink to the point of becoming overbearing in our opinions?

Naomi is otherwise a very attractive and bright lady. It is helpful to be reminded of how foolish we can sound when we let our temper get the better of us.

 
At 7/08/2008 10:22 PM, Blogger Gregory said...

A different question to ask would be "why are non-market systems so prone to shocks?"

 

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